It has been over a year since Mr Axel Weber made his
surprise decision not to seek
the top post at the European
Central Bank, which led soon thereafter to his resignation as president of the Bundesbank. These
events transpired at a critical moment for the
euro. The Greek crisis was still simmering,
and borrowing costs across southern Europe were rising, raising fears that other countries might follow the path of Greece, Ireland and
Portugal in needing bailouts.
The Wall Street Journal reported at the time that Mr Weber’s announcement “undermined
a key plank” of Chancellor Angela Merkel’s “strategy
to restore Germans' confidence in the euro.”
It went on to say that she “had hoped to win back Germans' trust in the
single currency by installing
a German as head of the
It was a logical strategy, given the confidence the German
people place in the leaders of the Bundesbank, and indeed,
in that venerated
institution itself. It is
a trust well-deserved given
that for 50 years the
Bundesbank guided the Deutschemark to a record of stability unmatched by any other central bank, except Switzerland, which was pursuing a similar policy based upon German
A German appointee
to the all-important ECB role was,
however, not to be.
Germany would have to wait
for one of their own to
assume the ECB’s top spot because
Mario Draghi was appointed to head up the single
currency’s central bank.
As a consequence, Ms Merkel
has resorted to other measures to bolster confidence
in the euro.
It has been an ongoing effort for Ms
Merkel because the euro
has seemingly lurched from crisis to crisis since Weber’s decision. Numerous measures have already been taken, with more to come, like the proposed European Stability Mechanism due to launch in July. But a simple, obvious step is being overlooked
by senior eurozone politicians.
An accurate accounting
and reporting of central bank
reserves would go a
long way to reassuring Germans and Europeans generally about the future of the euro.
If the single currency experiment succeeds, an accurate gold accounting will just be
“icing on the cake”. It will add little
to bolster confidence in a currency
that over time proves successful. But many still have doubts whether the euro will survive given two interlinked,
ongoing crises – sovereign
debt and bank solvency. For people worried
about the future of the euro – and indeed,
the European banking
system as a whole – their
concerns can be allayed with
the knowledge that the aggregate weight of gold owned and safely stored within each European central bank is sufficient
to provide a sound base
to establish a successor
to the euro, should that step become necessary.